Key Points:
- The Kiwi (NZDUSD) weakens, dipping to 0.59110 after hovering around 0.59331 at the open.
- The NZD/USD is under pressure despite new CPI of 2.5% still comfortably within the RBNZ 1–3% target range.
- Market outlook remains uncertain as traders continue to brace for upcoming U.S. Federal Reserve actions.
NZD/USD Drops as Inflation Data Fails to Influence Market Expectations
The New Zealand dollar (NZD/USD) lost ground, slipping to 0.59110 from an earlier high of 0.59432, marking a retreat after six consecutive days of gains. Despite New Zealand’s annual inflation rate ticking up to 2.5%, slightly exceeding expectations, the data didn’t alter market sentiment, which remains focused on the outlook for interest rates.
While inflation is still within the Reserve Bank of New Zealand’s (RBNZ) target range of 1–3%, the RBNZ is expected to proceed with rate cuts, with markets pricing in another 25bps cut at the May policy meeting. Expectations are that the RBNZ will continue its dovish stance, potentially bringing the benchmark rate to 2.75% by the end of 2025.
The Dollar’s Strengthing Pushes NZD Lower
The New Zealand dollar faces additional headwinds from a stronger U.S. dollar, especially following comments from Federal Reserve Chairman Jerome Powell, who signaled a cautious approach on interest rate cuts, suggesting that the Fed would wait for more data before making significant moves. This provided support for the USD, resulting in further weakness for the NZD/USD pair.
Technical Outlook
Picture: NZDUSD pulls back from 0.59432, testing support at 0.58856, as seen on the VT Markets app.
NZDUSD decreased by 0.37%, closing at 0.59110 after opening at 0.59331. The pair experienced a steady decline, reaching a low of 0.59078 before recovering slightly to close near 0.59110.
The moving averages (MA 5,10,30) suggest a bearish trend, with the shorter-term moving averages crossing below the longer-term ones. This indicates a potential for further downside movement. The MACD (12,26,9) also confirms this, showing a negative histogram as the MACD line (blue) remains below the signal line (yellow).
Key levels to monitor include 0.59432 as immediate resistance and 0.58856 as support. A break below support could signal a continuation of the downtrend, while a rebound above resistance could suggest a potential reversal.
NZDUSD is currently facing downward pressure, with the price dipping below key support levels. A sustained move below 0.58856 could signal further declines, while a move above 0.59432 may indicate a shift toward a more bullish trend. Traders should watch for broader market developments for further confirmation.
